STORY HIGHLIGHTS
- Optimism down slightly from last quarter’s 10-year high
- Owners cite government-related issues as their biggest challenge
- Intent to hire is up, but hiring also seen as a challenge
WASHINGTON, D.C. — U.S. small-business owners continue to display optimism about business conditions in the fourth quarter of 2017, according to the latest Wells Fargo/Gallup Small Business Index survey. In the quarterly survey, which measures small-business owners’ attitudes about a wide variety of factors affecting their businesses, the overall index score has declined slightly to +103, after hitting a 10-year high of +106 in July.
The Oct. 2-6 survey finds small-business owners reporting a more positive picture of their revenues in the fourth quarter of 2017 compared with the same quarter in 2016. Forty-six percent say their revenue has gone up over the past year, versus 37% a year ago. Similar year-over-year increases are seen in owners’ reports of their cash flow and their ease of obtaining credit.
The percentage of owners rating their company’s current financial situation as “very good” or “somewhat good” is now 71%, down from last quarter’s 76%. This, however, remains higher than the 66% seen one year ago.
Plans to Hire Increase, but Good Workers Getting Harder to Find and Keep
The percentage of owners who plan to increase the overall number of jobs at their business has ticked up in the fourth quarter to 32%, compared with 27% last quarter. This is the highest since the fourth quarter of 2016, which was also the highest in that calendar year.
The marginally higher intention to increase jobs occurs at a time when more small-business owners are worrying about being able to hire good employees. When asked to identify the most important challenge facing their business today, 16% of owners name hiring and retaining qualified staff. This is up from 13% who mentioned hiring last quarter and is the highest percentage citing the issue in the four years the question has been asked. This concern about hiring suggests that even as owners plan to hire more, the supply of suitable employees may be limited in a time of economic growth and relatively low unemployment.
| Most important challenge | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| % | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government policies (27%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government regulations | 11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Taxes | 11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Government (general) | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Healthcare | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Economic issues (17%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Attracting customers; targeting business opportunities; finding work/new business | 11 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| The economy | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hiring (16%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hiring qualified/good staff and retaining them | 16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial issues (15%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Financial stability; cash flow | 8 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Costs/Fees of running the business; having enough money for capital investment | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Credit availability | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Marketplace issues (12%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Competition; larger corporations; internet | 6 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Marketing; advertising; reaching out; getting noticed | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Product improvements; updated latest products; availability of products | 2 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Personal issues (5%) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Not enough time | 1 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Challenge of being own boss/working for self | 4 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Quarter 4, 2017 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| WELLS FARGO/GALLUP | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
In addition to hiring concerns, more than one in four owners mention some aspect of government policies as their top challenge, including mentions of government regulations and taxes. Owners also mention more traditional business challenges centering on attracting customers and finding work, as well as controlling cash flow, costs and competitive forces.
Bottom Line
U.S. small-business owners continue to be upbeat about their business situation, maintaining the sharply more optimistic attitudes measured since Donald Trump’s election last November. Optimism rose to a 10-year high last quarter, and it remains at about that level in the current survey.
Surveys since the election have shown that owners are particularly optimistic that the new administration will produce a more business-friendly economic and regulatory environment — although government-related issues remain the broad category mentioned most often when owners are asked to name their biggest challenge. Owners’ intention to hire new employees has edged up in the fourth quarter, but owners are also signaling that one apparent byproduct of the nation’s improved economy is greater difficulty in finding and keeping good workers.
by Coleen McMurray and Frank Newport
